A high-tech Perrine firm that delivered surveillance equipment to Venezuelan president Hugo Chávez's intelligence agency is scheduled to get a $2 million contract from the federal government at the request of Rep. Lincoln Diaz-Balart.

The Republican congressman made the request for the funds, called an earmark, in late September. The company, Phoenix Worldwide Industries, is expected to use the money to develop mobile platforms outfitted with biological and video sensors for the U.S. Army.

In 2001, Phoenix delivered $225,256 in equipment to the DISIP, Venezuela's secret police, according to federal court records.

Diaz-Balart, whose district runs from Perrine through Pembroke Pines, is an outspoken critic of Chávez -- a close ally of the Cuban government -- and joined with fellow Florida Republican lawmakers in March to ask President Bush to put Venezuela on the U.S. list of countries that sponsor terrorism.

It is not clear whether Diaz-Balart knew of Phoenix's sales to Venezuela or if his office did not vet the Miami-Dade company before recommending the earmark. Diaz-Balart declined to comment, issuing a short statement through a spokeswoman.

Lawmakers put earmarks in bills to direct funds to specific projects or organizations. But such spending bypasses the competitive allocation process and is under fire from both sides in this year's presidential race.

"That was a shot in the dark for us," said Esquivel Shuler. "He signed off on it."

Esquivel Shuler has said his company did no business with "the dictatorship of Chávez."In an e-mail last week to The Miami Herald, he said Phoenix "has not sold, shipped nor delivered any products and or services or requested permissions to ship to this country," and that "any and all statements to the effect that PWI shipped or [was] even in the process of shipping equipment to this country are false and very much untrue."

But federal court records in a 2004 investor lawsuit against the company show Phoenix had contracts with both DISIP and Venezuela's military intelligence agency, DIM, between 2001 and 2004.

BEFORE CHAVEZ

Asked about those records, Esquivel Shuler acknowledged this week that his company did deliver equipment one time to Venezuelan intelligence in 2001. But he said the sale was actually worked out with Venezuela's previous government in 1998, a year before Chávez rose to power. He said the deal was finalized three years later.

"The funding just arrived one day," he said. "We have never quoted or sought or directly applied for or directly tried to sell something" to Chávez's regime.

He added: "We had to deliver the equipment or we would have been sued and we would have lost."

Esquivel Shuler said that job resulted in a $225,256 contract to supply DISIP with a cellular-phone intercept system. The sale was approved by the U.S. State Department, he said.

The State Department declined to comment, saying it doesn't discuss its export licensees.

Shortly before the 2001 delivery to DISIP, the United States cut back on its cooperation with the secret agency because of growing concern about Chávez's leftist tendencies and friendship with Havana. U.S. officials said Cuban secret agents were helping DISIP monitor Chávez's critics.

Esquivel Shuler said he canceled an approved contract to sell $929,120 in spy equipment to DIM -- also ordered in 1998, he said -- because of Chávez's "anti-American" statements after the Sept. 11 terror attacks.

Four other pending contracts with Venezuela, potentially worth millions and listed in records from the federal court case, were also abandoned, Esquivel Shuler said. Phoenix kept them on later editions of its contracts list because "we were hoping the government would change."

EARMARKS CRITICIZED

Earmarks like the $2 million contract pushed by Diaz-Balart have come under increasing criticism. Last year, in the wake of several scandals, Congress passed new ethics rules, including reforms that for the first time required members to put their names on earmarks.

But Congress does not oblige its members to check out companies to whom they earmark taxpayer money.

"There is nothing that requires them to do any sort of vetting," said Leslie Page, of the nonpartisan Citizens Against Government Waste. We the taxpayers are left at the mercy of their discretion."

First appeared in the Miami Herald as ""Diaz-Balart secures $2M contract for firm that sold spy gear to Caracas". Thanks to The Miami Herald and Dan Christensen for covering these documents. Copyright remains with The Miami Herald and the author. Contact The Miami Herald for reprint rights